President Joko Widodo's main rivals in next year's elections have taken aim at his administration's economic policies, expressing concerns over the weakening of the Indonesian currency amid global uncertainty.

"We are gravely concerned with the endless weakening of the rupiah," said retired army general Prabowo Subianto and his running mate, Mr Sandiaga Uno, in a statement sent to The Sunday Times.

"It's becoming a burden on our national economy (and) for the most vulnerable of Indonesians, who sooner or later will face rising prices on basic commodities like the goods they consume daily," they said.

The statement, issued two weeks before campaigning for the presidency officially kicks off on Sept 23, followed the announcement on Wednesday that Indonesia would raise import taxes on more than 1,000 goods - from electronics to luxury cars - in a bid to curb fast-surging imports and avert a further drop in the value of the rupiah. The rupiah has lost about 9 per cent against the US dollar this year, making it the second-worst performer in Asia after India's rupee, which has fallen by 11 per cent.

Mr Prabowo and Mr Sandiaga blamed the falling rupiah on the weakness of Indonesia's economic fundamentals, as reflected by the current account deficit which could hit US$25 billion (S$34 billion) this year. A country runs a current account deficit when it imports more goods and services than it exports.

Mr Prabowo and Mr Sandiaga also said that Indonesia's manufacturing sector has declined from 30 per cent of GDP in 1997 to just 19 per cent today, adding that this was affecting the job market as well as the country's export capability.

Their statement came a day after Maritime Affairs Coordinating Minister Luhut Pandjaitan, who is a close aide of President Joko and part of a government team tackling Indonesia's economic challenges, sought to assuage fears of a repeat of the 1998 Asian financial crisis.

Indonesia's foreign debt to GDP ratio today is 34 per cent, compared to 60 per cent between 1997 and 1998, while current inflation stands at 3.2 per cent, a healthy level for a developing country that recorded growth of 5.3 per cent in the second quarter this year, the highest since 2014, said Mr Luhut last Friday.

He insisted that the government could stabilise the economy, which is driven mostly by the domestic sector and investment.

President Joko, who is popularly known as Jokowi, is seeking a second term in office next April.

A version of this article appeared in the print edition of The Sunday Times on September 09, 2018, with the headline 'Jokowi's election rivals raise rupiah concerns'. Print Edition | Subscribe

The Straits Times

We have been experiencing some problems with subscriber log-ins and apologise for the inconvenience caused. Until we resolve the issues, subscribers need not log in to access ST Digital articles. But a log-in is still required for our PDFs.